We must clearly understand
that all that we purchase out of our surplus money is not investment. We also
need to understand that what we saving is not totally an investment.
We assume that
real estate is always an investment, but when we buy a property for our own use,
we can’t treat it as an investment. i.e., buying a house is a real estate deal
but is not an investment, if consumed by us.
Likewise, Buying a Vehicle (Car/Motorbike)
is not an investment as it will have depreciated value in future, unless it's a
vintage car and is bought in the anticipation of selling at a higher price
because of being an antique.
Similarly investors in art & paintings invest
with a motive of selling such item at a higher price because of its creativity
and imaginative presentation.
Thus to have a clear idea,
investment is termed as an asset that is bought in expectation that it will
generate income or appreciate in the future. In simple sense, an investment is
the purchase of goods that are not consumed immediately i.e., today but are
used in the future to create wealth.
Investment planning is
necessary for all individuals who wish to achieve their financial goals on
effective manner. Investment planning is needed to plan your available limited
resources to squeeze the maximum benefit out of them. It is important to ensure
that money works for us rather than we work always towards earning money. We
must ensure to plan our investments in such a manner that it will improve our
future welfare & generate income from our investment. Funds required to
invest may come from assets already owned, borrowed money, and savings or
foregone consumption. Investment Planning will play an important role in planning
your investments to fulfill your life's major financial goals / needs like:
o
Financial
Security / Protection
o
Accumulating /
Maximizing of Wealth
o
Reliable
regular income generation
o
Protection
against inflation and taxes
o
Career
Building
o
Marriage
o
Asset Purchase
like a dream house or a car
o
Building Education
Corpus for self & children
o
Comfortable
Retirement Funding
o
Creating
wealth over the long run
o
Building brightened
future for self and family
o
To Meet
Emergency Expenses etc.,
The
need for Investment planning arises when we seek to manage our wealth /
investment effectively and obtaining the most (returns) from it.
This idea is really helpful and useful. In every decisions we should need a planning so that it would be successful. Likewise if we're going to invest any properties we should think twice and we need to plan it better. I am glad that I found your blog because I get some ideas on it. Thanks.
ReplyDeleteKirstz @ real estate investment Philippines